A Federal credit union shall have succession in its corporate name during its existence and shall have power—
(5) to make loans, the maturities of which shall not exceed 15 years, except as otherwise provided herein, and extend lines of credit to its members, to other credit unions, and to credit union organizations and to participate with other credit unions, credit union organizations, or financial organizations in making loans to credit union members in accordance with the following:
(A) Loans to members shall be made in conformity with criteria established by the board of directors: Provided, That—
(i)
a residential real estate loan on a one-to-four-family dwelling, including an individual cooperative unit, that is or will be the principal residence of a credit union member, and which is secured by a first lien upon such dwelling, may have a maturity not exceeding thirty years or such other limits as shall be set by the National Credit Union Administration Board (except that a loan on an individual cooperative unit shall be adequately secured as defined by the Board), subject to the rules and regulations of the Board;
(ii)
a loan to finance the purchase of a mobile home, which shall be secured by a first lien on such mobile home, to be used by the credit union member as his residence, a loan for the repair, alteration, or improvement of a residential dwelling which is the residence of a credit union member, or a second mortgage loan secured by a residential dwelling which is the residence of a credit union member, shall have a maturity not to exceed 15 years or any longer term which the Board may allow;
(iii)
a loan secured by the insurance or guarantee of, or with advance commitment to purchase the loan by, the Federal Government, a State government, or any agency of either may be made for the maturity and under the terms and conditions specified in the law under which such insurance, guarantee, or commitment is provided;
(iv)
a loan or aggregate of loans to a director or member of the supervisory or credit committee of the credit union making the loan which exceeds $20,000 plus pledged shares, be approved by the board of directors;
(v)
loans to other members for which directors or members of the supervisory or credit committee act as guarantor or endorser be approved by the board of directors when such loans standing alone or when added to any outstanding loan or loans of the guarantor or endorser exceeds $20,000;
(vi) the rate of interest may not exceed 15 per centum per annum on the unpaid balance inclusive of all finance charges, except that the Board may establish—
(I)
after consultation with the appropriate committees of the Congress, the Department of Treasury, and the Federal financial institution regulatory agencies, an interest rate ceiling exceeding such 15 per centum per annum rate, for periods not to exceed 18 months, if it determines that money market interest rates have risen over the preceding six-month period and that prevailing interest rate levels threaten the safety and soundness of individual credit unions as evidenced by adverse trends in liquidity, capital, earnings, and growth; and
(II)
a higher interest rate ceiling for Agent members of the Central Liquidity Facility in carrying out the provisions of subchapter III for such periods as the Board may authorize;
(vii)
the taking, receiving, reserving, or charging of a rate of interest greater than is allowed by this paragraph, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. If such greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back from the credit union taking or receiving the same, in an action in the nature of an action of debt, the entire amount of interest paid; but such action must be commenced within two years from the time the usurious collection was made;
(viii)
a borrower may repay his loan, prior to maturity in whole or in part on any business day without penalty, except that on a first or second mortgage loan a Federal credit union may require that any partial prepayments (I) be made on the date monthly installments are due, and (II) be in the amount of that part of one or more monthly installments which would be applicable to principal;
(ix)
loans shall be paid or amortized in accordance with rules and regulations prescribed by the Board after taking into account the needs or conditions of the borrowers, the amounts and duration of the loans, the interests of the members and the credit unions, and such other factors as the Board deems relevant; [1]
(x)
loans must be approved by the credit committee or a loan officer, but no loan may be made to any member if, upon the making of that loan, the member would be indebted to the Federal credit union upon loans made to him in an aggregate amount which would exceed 10 per centum of the credit union’s unimpaired capital and surplus.
(B)
A self-replenishing line of credit to a borrower may be established to a stated maximum amount on certain terms and conditions which may be different from the terms and conditions established for another borrower.
(D)
Loans to credit union organizations shall be approved by the board of directors and shall not exceed 1 per centum of the paid-in and unimpaired capital and surplus of the credit union. A credit union organization means any organization as determined by the Board, which is established primarily to serve the needs of its member credit unions, and whose business relates to the daily operations of the credit unions they serve.
(E)
Participation loans with other credit unions, credit union organizations, or financial organizations shall be in accordance with written policies of the board of directors: Provided, That a credit union which originates a loan for which participation arrangements are made in accordance with this subsection shall retain an interest of at least 10 per centum of the face amount of the loan;
(6) to receive from its members, from other credit unions, from an officer, employee, or agent of those nonmember units of Federal, Indian tribal, State, or local governments and political subdivisions thereof enumerated in section 1787 of this title and in the manner so prescribed, from the Central Liquidity Facility, and from nonmembers in the case of credit unions serving predominately low-income members (as defined by the Board) payments, representing equity, on—
(7)
to invest its funds (A) in loans exclusively to members; (B) in obligations of the United States of America, or securities fully guaranteed as to principal and interest thereby; (C) in accordance with rules and regulations prescribed by the Board, in loans to other credit unions in the total amount not exceeding 25 per centum of its paid-in and unimpaired capital and surplus; (D) in shares or accounts of savings and loan associations or mutual savings banks, the accounts of which are insured by the Federal Deposit Insurance Corporation; (E) in obligations issued by banks for cooperatives, Federal land banks, Federal intermediate credit banks, Federal home loan banks, the Federal Housing Finance Board, or any corporation designated in section 9101(3) of title 31 as a wholly owned Government corporation; or in obligations, participations, or other instruments of or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association or the Government National Mortgage Association; or in mortgages, obligations, or other securities which are or ever have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 1454 or 1455 of this title; or in obligations or other instruments or securities of the Student Loan Marketing Association; or in obligations, participations, securities, or other instruments of, or issued by, or fully guaranteed as to principal and interest by any other agency of the United States and a Federal credit union may issue and sell securities which are guaranteed pursuant to section 1721(g) of this title; (F) in participation certificates evidencing beneficial interests in obligations, or in the right to receive interest and principal collections therefrom, which obligations have been subjected by one or more Government agencies to a trust or trusts for which any executive department, agency, or instrumentality of the United States (or the head thereof) has been named to act as trustee; (G) in shares or deposits of any central credit union in which such investments are specifically authorized by the board of directors of the Federal credit union making the investment; (H) in shares, share certificates, or share deposits of federally insured credit unions; (I) in the shares, stocks, or obligations of any other organization, providing services which are associated with the routine operations of credit unions, up to 1 per centum of the total paid in and unimpaired capital and surplus of the credit union with the approval of the Board: Provided, however, That such authority does not include the power to acquire control directly or indirectly, of another financial institution, nor invest in shares, stocks or obligations of an insurance company, trade association, liquidity facility or any other similar organization, corporation, or association, except as otherwise expressly provided by this chapter; (J) in the capital stock of the National Credit Union Central Liquidity Facility; (K) investments in obligations of, or issued by, any State or political subdivision thereof (including any agency, corporation, or instrumentality of a State or political subdivision), except that no credit union may invest more than 10 per centum of its unimpaired capital and surplus in the obligations of any one issuer (exclusive of general obligations of the issuer);
(8)
to make deposits in national banks and in State banks, trust companies, and mutual savings banks operating in accordance with the laws of the State in which the Federal credit union does business, or in banks or institutions the accounts of which are insured by the Federal Deposit Insurance Corporation, and for Federal credit unions or credit unions authorized by the Department of Defense operating suboffices on American military installations in foreign countries or trust territories of the United States to maintain demand deposit accounts in banks located in those countries or trust territories, subject to such regulations as may be issued by the Board and provided such banks are correspondents of banks described in this paragraph;
(9)
to borrow, in accordance with such rules and regulations as may be prescribed by the Board, from any source, in an aggregate amount not exceeding, except as authorized by the Board in carrying out the provisions of subchapter III, 50 per centum of its paid-in and unimpaired capital and surplus: Provided, That any Federal credit union may discount with or sell to any Federal intermediate credit bank any eligible obligations up to the amount of its paid-in and unimpaired capital;
(10)
to levy late charges, in accordance with the bylaws, for failure of members to meet promptly their obligations to the Federal credit union;
(11)
to impress and enforce a lien upon the shares and dividends of any member, to the extent of any loan made to him and any dues or charges payable by him;
(12) in accordance with regulations prescribed by the Board—
(A)
to sell, to persons in the field of membership, negotiable checks (including travelers checks), money orders, and other similar money transfer instruments (including international and domestic electronic fund transfers and remittance transfers, as defined in section 1693o–1 of title 15); and
(13)
in accordance with rules and regulations prescribed by the Board, to purchase, sell, pledge, or discount or otherwise receive or dispose of, in whole or in part, any eligible obligations (as defined by the Board) of its members and to purchase from any liquidating credit union notes made by individual members of the liquidating credit union at such prices as may be agreed upon by the board of directors of the liquidating credit union and the board of directors of the purchasing credit union, but no purchase may be made under authority of this paragraph if, upon the making of that purchase, the aggregate of the unpaid balances of notes purchased under authority of this paragraph would exceed 5 per centum of the unimpaired capital and surplus of the credit union;
(14)
to sell all or a part of its assets to another credit union, to purchase all or part of the assets of another credit union and to assume the liabilities of the selling credit union and those of its members subject to regulations of the Board;
(15) to invest in securities that—
(B)
are mortgage related securities (as that term is defined in section 78c(a)(41) of title 15), subject to such regulations as the Board may prescribe, including regulations prescribing minimum size of the issue (at the time of initial distribution) or minimum aggregate sales prices, or both; or
(C)
are small business related securities (as defined in section 78c(a)(53) of title 15), subject to such regulations as the Board may prescribe, including regulations prescribing the minimum size of the issue (at the time of the initial distribution), the minimum aggregate sales price, or both;
(16)
subject to such regulations as the Board may prescribe, to provide technical assistance to credit unions in Poland and Hungary; and
(17)
to exercise such incidental powers as shall be necessary or requisite to enable it to carry on effectively the business for which it is incorporated.
(June 26, 1934, ch. 750, title I, § 107, formerly § 7, 48 Stat. 1218; Dec. 6, 1937, ch. 3, § 2, 51 Stat. 4; July 31, 1946, ch. 711, § 1, 60 Stat. 744; 1947 Reorg. Plan No. 1, § 401, eff. July 1, 1947, 12 F.R. 4534, 61 Stat. 952; June 29, 1948, ch. 711, §§ 1, 2, 62 Stat. 1091; Oct. 25, 1949, ch. 713, § 1, 63 Stat. 890; May 13, 1952, ch. 264, 66 Stat. 70; renumbered § 8 and amended Pub. L. 86–354, § 1, Sept. 22, 1959, 73 Stat. 630; Pub. L. 88–353, § 1, July 2, 1964, 78 Stat. 269; Pub. L. 89–429, § 7, May 24, 1966, 80 Stat. 167; Pub. L. 90–44, §§ 2, 3, July 3, 1967, 81 Stat. 110, 111; Pub. L. 90–375, § 1(1)–(3), July 5, 1968, 82 Stat. 284; Pub. L. 90–448, title VIII, § 807(n), Aug. 1, 1968, 82 Stat. 545; Pub. L. 91–206, § 2(1), Mar. 10, 1970, 84 Stat. 49; renumbered title I, § 107, and amended Pub. L. 91–468, §§ 1(2), 10, Oct. 19, 1970, 84 Stat. 994, 1017; Pub. L. 92–318, title I, § 133(c)(4), June 23, 1972, 86 Stat. 270; Pub. L. 93–383, title VII, § 721, title VIII, § 805(c)(5), Aug. 22, 1974, 88 Stat. 719, 727; Pub. L. 93–495, title I, § 101(d), Oct. 28, 1974, 88 Stat. 1502; Pub. L. 93–569, § 6, Dec. 31, 1974, 88 Stat. 1866; Pub. L. 95–22, title III, §§ 302, 303, Apr. 19, 1977, 91 Stat. 49, 51; Pub. L. 95–630, title V, § 502(b), title XVIII, § 1803, Nov. 10, 1978, 92 Stat. 3681, 3723; Pub. L. 96–153, title III, § 323(d), Dec. 21, 1979, 93 Stat. 1120; Pub. L. 96–161, title I, § 103(b), Dec. 28, 1979, 93 Stat. 1234; Pub. L. 96–221, title III, §§ 305(b), 307, 309(a)(1), 310, Mar. 31, 1980, 94 Stat. 146–149; Pub. L. 97–320, title V, §§ 506–514, 516–518, Oct. 15, 1982, 96 Stat. 1528–1530; Pub. L. 97–457, §§ 25, 26, Jan. 12, 1983, 96 Stat. 2510; Pub. L. 98–440, title I, § 105(b), Oct. 3, 1984, 98 Stat. 1691; Pub. L. 98–479, title II, § 206, Oct. 17, 1984, 98 Stat. 2234; Pub. L. 100–86, title VII, §§ 702, 703, Aug. 10, 1987, 101 Stat. 652; Pub. L. 101–179, title II, § 206(b), Nov. 28, 1989, 103 Stat. 1311; Pub. L. 103–325, title II, § 206(b), Sept. 23, 1994, 108 Stat. 2199; Pub. L. 104–208, div. A, title II, § 2306, Sept. 30, 1996, 110 Stat. 3009–426; Pub. L. 109–351, title V, §§ 502, 503, title VII, § 726(3)–(8), Oct. 13, 2006, 120 Stat. 1975, 2002; Pub. L. 111–203, title III, § 362(1), title X, § 1073(d), July 21, 2010, 124 Stat. 1549, 2066.)